The recent coronavirus outbreak has sent the economy reeling, with fears of a looming recession and massive spikes in unemployment. The federal government has stepped in to provide relief for individuals and corporations through a series of economic stimulus packages over the past several weeks.
At $2 trillion, the most recent bill is the largest stimulus bill in U.S. history. As part of the package, millions of people older than age 18 will receive $1,200 checks, with an additional $500 checks going to the parents of qualifying children under age 18. The legislation includes $377 billion to small businesses and boosts unemployment benefits by $600 per week.
However, college students and young adults across the country are largely ineligible to receive benefits because they are claimed as dependents by their parents. Students have struggled to deal with the economic toll of the virus, facing internship cancellations and the loss of on-campus jobs. Many students are also bound to pay rent for 12-month leases in Ann Arbor while they are away, and many students have had trouble finding people to sublet their apartments over the summer.
Thomas Lyon, professor of sustainable science, technology and commerce at the University of Michigan, called the bill “enormous and complex,” noting the importance of providing relief for everyday Americans. He said the bill would provide some help for students regarding loan payments.
“We could well find ourselves in an extended recession, making it hard for students graduating this year and next year to find the kind of jobs they were hoping for,” Lyon said. “This, in turn, makes repaying student loans more challenging. The stimulus bill provides some loan relief: no payments on federal loans through the U.S. Department of Education need be made until October, and no interest will accrue during that time. However, federal loans not run through the Department of Education are not affected, nor are private loans. There are no provisions for debt forgiveness. Thus, many students will not see any relief on their student loans.”
Several students also commented on the historic stimulus package and what its implications are for college students.
LSA freshman Nick Schuler, freshman chair of the University’s chapter of College Republicans, said these measures were necessary given the unprecedented circumstances of the coronavirus outbreak.
“Because this is the first economic downturn to come from the service sector, the money must largely go directly to the hands of small businesses and the taxpayers which President (Donald) Trump has done,” Schuler said. “Which is why many students are frustrated, only those that work will receive a check which is equitable in my eyes.”
Business sophomore Ari Bosse, vice president of investments for the Alternative Investments Club, told The Daily that the stimulus package was a necessary short-term solution to the financial crisis facing the nation amid the coronavirus outbreak. Bosse said he understood the backlash from young adults over their exclusion from the federal check distributions.
“College students classified as dependents have every right to be upset about being excluded from federal check distributions, as college students are often independently responsible for a variety of financial obligations,” Bosse said. “While a more inclusive plan would be preferred, it will be difficult to make a case for why the aid package — which is already the largest in history — should be expanded.”
Business junior Jon Rotbard said the stimulus bill is able to provide a temporary fix during these unprecedented times. He also commented on the ineligibility of many college students who qualify as dependents for these stimulus checks.
“From my understanding parents get more money if they have children or dependents so it evens out,” Rotbard said. “I think a dependent needs it a lot less than someone who’s actually been laid off and will seriously have their quality of life reduced without that check.”
The stimulus package also has provisions that benefit major businesses and corporations.
Rotbard told The Daily that this stimulus is critical not only for individuals but for businesses as well.
“From a finance and business perspective, (it) keeps businesses running too,” Rotbard said. “Most businesses have so much debt and so little cash that they will all shutter without massive stimulus.”
Lyon was more critical of the inclusion of some of the features of the legislation, particularly a $500 billion corporate liquidity fund.
“The most questionable part of the package is the $500 billion fund to provide loans to large businesses,” Lyon said. “Many large businesses are sitting on large cash reserves and used much of the historic $1 trillion Trump tax cut to buy back their own shares. It is hard to see why big business(es) should be a high-priority concern for the U.S. at this time. The original Republican proposal had very few oversight measures on how the Trump administration could dole out the $500 billion, but at Democratic insistence, the final bill requires immediate disclosure of beneficiaries and includes some congressional oversight.”
LSA sophomore Regina Egan, communications director for the University’s chapter of College Democrats, declined to comment on the specifics of the bill but said the country is looking for leadership during this crisis.
“We are living through a rare and tumultuous time in which the need for government is clearer now more than ever,” Egan said. “What Americans and young people especially need is government leadership and a system that serves each and every one of us.”
Daily Staff Reporter Sarah Payne can be reached at paynesm@umich.edu.